About this Author

College chemistry, 1983

The 2002 Model

After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases.
To contact Derek email him directly: derekb.lowe@gmail.com
Twitter: Dereklowe

June 3, 2010

Sequenom: Faking It

Posted by Derek

I wrote here about Sequenom, a company which claimed to have developed an in vitro test for Downs Syndrome. The whole story dissolved into a heap of lawsuits, allegations of fraud, questions about whether Sequenom ever had such a test at all, and other craziness.

Now the SEC has charged a former executive of the company with lying to investors. Elizabeth Dragon publicly touted the accuracy of the company's test several times, in front of large groups, before the roof came in. Here's the official complaint (if that doesn't work, try here) and it's most interesting reading:

Dragon knew that all but six of the 51 samples had been tested on an unblinded basis, and also knew that, of the six blinded samples, her scientists incorrectly called one of the three T21 samples. In fact, in an e-mail to her lead scientist, Dragon asked how close the call was when she learned that the third T21 sample had not been called correctly on a blinded basis.

On June 3, 2008, Dragon presented data regarding the Down Syndrome Test at an analyst-and-investor briefing during the ISPD conference, which was simultaneously made available to the public via a webcast. . .The slides in Dragon's presentation indicated that the Test performed with 100% accuracy. . .

. . .Additionally, following her presentation, Dragon was asked a question regarding whether there was ambiguity in calling the samples. In response, she stated that T21 samples were very clear, and that "[t]he overall call is strongly positive . . ., you know it's definitely a Downs and you can read it as a Downs without any problem . . . "

She's also charged with stating that the unblinded tests were, in fact, blinded, and apparently never mentioned that unblinded tests were even being conducted. When blinded tests were run later, their accuracy was below that of the tests already on the market, actually. The SEC charges Dragon with pressuring the scientists involved to drop samples and re-evaluate their calls until the accuracy numbers came up. Her presentation of these runs also showed "100% accuracy", with no false positives and no false negatives. None of it was true.

I'm glad to see this prosecution happening. We live by accurate data, and seeing it sawed off and spray-painted like this makes me furious. If the SEC's allegations are true, I hope it can serve as an example to others who might be tempted to try the same sort of thing.

I'm still waiting to read the "faking it" part...The byline reads as present tense. I guess writing "faked it"(as in 'in the past') would not sufficiently satisfy your juvenile thirst for some sort of quasi-revenge on the shareholders who flamed you the last time you wrote about SQNM.
So are they(SQNM) still "faking it"?

By the way, even if SQNM lied now or then, the fact is you are and will always be a little squirrel. It comes through so clearly in your writing.
If you did not feel the need to bend your words, then nobody would need to flame you, stupid. Get it?

By MY experiences in biotech, I would say this sort of stuff is almost the norm for "successful" managers and some upper level "scientists".

"The SEC charges Dragon with pressuring the scientists involved to drop samples and re-evaluate their calls until the accuracy numbers came up. Her presentation of these runs also showed "100% accuracy", with no false positives and no false negatives. None of it was true." "pressuring the scientists" = bahramdipity. See the Dilbert cartoon ("Mixed messages!") on page 11 of this PDF:

"If the SEC's allegations are true, I hope it can serve as an example to others who might be tempted to try the same sort of thing." Yes, probably a slap on the wrist and a pittance of a fine. A real deterrent. Just like Oraflex (1982) was an example to Merck not to mess with Vioxx (2004).

Mikey66,
"The byline reads as present tense" only if you want it to read that way. Maybe grammar isn't your strength (unlike your wonderful flair with silly insults), but have you considered the possibility of "faking it" meaning "was faking it" (as in 'in the past') and not "still faking it"? Which makes your whole point moot...

Thanks to anon the II for the link. It appears that Ms. Dragon has already plead guilty to federal charges of securities fraud.

The SEC cannot bring criminal charges against anyone, so the "prosecution" that is still going on against Ms. Dragon is actually a civil case. It's not clear to me why the SEC case continues aven after Ms. Dragon has please guilty to a crime. Maybe it helps recover damages against the victims?

Good to see that you've brought some of Sequenom's investors out to play. Hours of amusement. I guess it keeps them from their usual hobbies of trying to refill damaged liquid oxygen Dewars or playing with acetylene cylinders while smoking weed.

Maybe the SEC is looking to get Ms. Dragon to implicate other people in Sequenom, and to provide evidence against them so that they can get the whole bunch. They may want to make sure the lesson is appropriately transmitted to other dishonest people, or they may just not want to look impotent.

Jeez, it's a penny stock company. Of course it's a scam. They exist for the sole purpose of generating press releases about "accomplishments" or "milestones" or "pending mergers". Anything to pump the stock price just a little.

Sorry to disappoint y'all, but ol' Derek's gonna hafta write another retraction b4 it's all over. And it will come from above him.
I guess y'all don't remember the last time he had to do that too. I KNOW HE DOES!lol

"Maybe grammar isn't your strength (unlike your wonderful flair with silly insults), but have you considered the possibility of "faking it" meaning "was faking it" (as in 'in the past') and not "still faking it"?"--Mikey99
My point is that he is being intentionally ambiguous in order to attempt to mislead readers that SQNM is still involved with the RNA test and is STILL misleading investors. Dragon Lady has been gone for over a year.
And you can expect to hear from Derek again on this item in the next week or so trying to rationalize his semi-hit-job.
I would not doubt if Derek is actually signing in as Mikey99. Who else would feel the need to write such a reply? Weird.

And to the guy who can apparently tell how much I know "about the biotech industry": Where in my post did you pick up anything in regards to the industry and my understanding, or lack thereof? It has no bearing on anything in my post.

1) There's this theory that one should have some idea of how the businesses one invests in work, so that one can actually tell (for example) whether they're actually doing well or poorly, and not just depend on their word for it (which is almost always good, until they close up shop and turn your investment to dust). I guess you're a skeptic of that theory.

2) When the SEC is dragging out your execs for lying to investors, and your company has to promise to actually tell investors (for example) whether their trials are blinded or not, well, it becomes sort of hard to trust that they have (or will have) any product to sell. You don't do unblinded tests if you actually have something that works. If you're holding your breath waiting for a retraction, then you probably should sit down, so you don't damage what few brain cells you have when you fall over.

3) I don't think anyone needs to take potshots at your fellow investors - you do such a good job at epitomizing their investment strategies and rational thought that no further criticism is actually required. Have you considered investing in Generex?

I do not know much about the company and Derek, as everybody else, can be wrong on many things ... (it is a blog and not a courthouse anyway, so we do not need to agree with him to read what he writes...)

but I would say that the lines below are quite clear:

"June 2 (Bloomberg) -- Elizabeth A. Dragon, former senior vice president of research and development at Sequenom Inc., pleaded guilty today in federal court to conspiracy to commit securities fraud for lying to investors about the company’s prenatal test for Down syndrome, U.S. officials said."

I know nothing about Sequenom beyond what I read in the media. Because my spouse and I both work in the pharma world, we put most of our own money in places outside the pharma/biotech world, partly to avoid having all our eggs in the pharma basket and partly to avoid any risk of even unintentionally using inside information.

But I do know Derek. He knows what he is talking about, he says what he actually thinks, and he is always careful to distinguish his opinions from actual data. There are some subjects on which I happen not to agree with him, but in all cases when he mentions those topics he makes it clear he is not speaking as a scientist but only expressing his personal views.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

Your writing is vastly misinformed, Besides the fact that you look like someone that would be found pumping gas in delaware your obviously someone who has done zero research on the current CEO Harry Hixson and chief scientist Dr. Lo. You are by far a tool and would not last one minute on wall st. here in NY. You are a far cry from a man and I would hesitate to urinate on ur beard if by chance you were on fire....Hope you have a terrible weekend and please quit the biz because people like you are why this country is where it is now.

I didn't realize Wall Street titans had the time to flame bloggers. I wonder when Warren Buffett is going to show up to multipost complaints about Dr. Lowe's misinformed rhetoric, though I'm guessing in that event his response might have a better grasp of basic grammar.

Actually, I was under the impression that Wall Street people mostly took the money and ran - smack is usually for when you haven't gotten any money to run with, or won't shortly.

I didn't realize Wall Street titans had the time to flame bloggers. I wonder when Warren Buffett is going to show up to multipost complaints about Dr. Lowe's misinformed rhetoric, though I'm guessing in that event his response might have a better grasp of basic grammar.

Actually, I was under the impression that Wall Street people mostly took the money and ran - smack is usually for when you haven't gotten any money to run with, or won't shortly.

You guys are doing a terrible job of insulting me. Is making money(And I have made a substantial sum on SQNM)really only about making everyone aware of how much you know about investing? You all sound like the experts who lost their asses in '08 and were too afraid to make the move back in. And now all you have is the knowledge that you are 'smarter' than other investors? I'll take the quarter mil instead. You can bask in all your glory. LOL
Hypothetical: One guy knows next to nothing and makes quarter mil in a year and he's and idiot. But take a guy who knows all about the things he invests in and loses 50000 over the same period and he's smart. I don't get it. 'Splain Lucy!

"2) When the SEC is dragging out your execs for lying to investors, and your company has to promise to actually tell investors (for example) whether their trials are blinded or not, well, it becomes sort of hard to trust that they have (or will have) any product to sell. You don't do unblinded tests if you actually have something that works. If you're holding your breath waiting for a retraction, then you probably should sit down, so you don't damage what few brain cells you have when you fall over."--Hap Too clever by half. But not very witty. Sort of like listening to KORN songs being played by an orchestra. It doesn't work.

I'll definitely be sure to come back and visit y'all when SQNM hits 25.00. I'll share all my 'knowledge' with you sad sacks at that time. 'Til then............. Ta Ta and keep out of the market. I'll tell you when it's safe to jump in. Har Har Har.